Bitcoin [BTC] ETF is a ‘chicken and egg problem’, says investment fund CEO Ali Hassan

With the talks of a Bitcoin [BTC] exchange-traded fund [ETF] occurring recently, many prominent market players are offering their opinions on the matter. Ali Hassan, the Co-Founder and CEO of Crescent Crypto Asset Management, is the latest to do so. In a recent interview, Hassan stated that the market might see the approval of a Bitcoin ETF in the next 18 months or so.

Hassan seemed to be looking into more of the future, seeing the mainstream adoption and production of multi-coin ETFs. On these, he said:

“What’s really interesting is these multi-coin products, and I think that’s what’s going to transition the ecosystem from just access into looking at this as a different asset class.”

The United States Securities and Exchanges Commission [SEC] is yet to make a decision on the derivative products that could be offered along with Bitcoin. Crescent also has the goal of offering products on exchanges. When asked about the status of the ETF, Ali stated:

“It’s a chicken and egg problem. The SEC wants to see investor protection, in specific for retail investors and what the community is saying is passive vehicles will actually increase the participation in the market and reduce some of those concerns. We do think that a product is coming soon.  There are some very interesting products on the market right now. The VanEck product is something that we’d like to look out for. Those are all single coin products though.”

Speaking in an interview with Bloomberg, Ali also elaborated upon the approach Crescent’s flagship fund takes. He stated that it was more of a passive approach to trading, saying that investors in the United States preferred this. Speaking more on Crescent’s customers, he stated:

“Our investors have been happy, we have not had a single redemption and we’re excited to say that we’re seeing tremendous demand both internationally and in the US. The elephant in the room is that US investors like passive investments, it’s a really good way to get exposure without manager bias. It’s a lot cheaper and a lot more efficient tax-wise and fee-wise. Demand is there and we’re playing in that demand.”

The cryptocurrency market has been historically volatile. Crescent, however, has planned for the significant changes that the prices of these assets undergo. Hassan revealed that the fund reduces the volatility by holding 20 coins with different levels of correlation while considering the 90-day trailing average market capitalization. This, he said, “mutes the volatility” of the portfolio relative to a portfolio with Bitcoin alone. He said:

“We hold 20 coins. When you hold 1 Bitcoin or a part of a Bitcoin, you’re opening yourself up to the idiosyncratic risk of one asset. By holding 20, the portfolio behaves in a way that’s significantly less volatile. We hold all our coins in cold storage, we do not open ourselves up to exchange risk. We would not risk our client’s assets by leaving them on an exchange.”

The company, which reportedly holds about $50 million in assets, demonstrates a diversified flagship portfolio. The portfolio gives major importance to Bitcoin [BTC], with a 44.7% split for the coin. The other coins in the fund include Ethereum [ETH] at 19.3%, XRP at 8.7%, Bitcoin Cash [BCH] at 6.1% and EOS [EOS] at 3.4%. There are more coins in the fund at minor values. On the fund, the CEO stated:

“What our fund does is capture the value of the overall cryptocurrency blockchain asset class. We’ve positioned the fund in a way that it’s a long-only, unleveraged asset that solves a complexity free access vehicle for retail and institutional investors.”

When asked to give his two cents on the price prediction for Bitcoin, Hassan called out to the speculator investor market and stated:

“[It’s going] to the moon. We’re expecting it to go much higher. We think that there’s orders of magnitude to go and owning it in a passive vehicle like ours is a really good way to participate.”

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